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tv   Nightly Business Report  PBS  March 21, 2012 6:30pm-7:00pm EDT

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captioning sponsored by wpbt >> nextum, the supreme court considers if president obama's health care laws are unconstitutional. what a ruling could make. for healthcare stocks.. >> the law gets upheld, the knee-jerk reaction will probably be: good for hospitals, bad for managed care, and probably the status quo for most of the other groups. >> tom: then, two very different tech tales: hewlett-packard's latest turnaround plans; and online gaming firm zynga goes shopping. it's "nightly business report" for wednesday, march 21. this is "nightly business report" with susie gharib and tom hudson.
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"nightly business report" is made possible by: >> susie: good evening, everyone. the u.s. supreme court takes up the case against president obama's health care reform law next monday. and tom, over three days the high court will hear arguments on the constitutionality of the act passed two years ago. >> tom: susie, the most controversial part of the law is the president's plan to insure the roughly 30 million americans who have no health insurance, the so-called individual mandate requiring americans to buy insurance or pay a penalty.
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the high justices could overturn all or parts of the law. it could also be upheld. the last time the supreme court devoted six hours to oral arguments was 44 years ago with the voting rights act. >> susie: well, leading up to the historic arguments, tonight, we begin a special series on the future of healthcare reform. we begin with suzanne pratt with a look at healthcare stocks. >> reporter: while the future of u.s. healthcare reform is debated in washington next week, healthcare investors around the globe will no doubt be listening. after a great run in 2011, the sector has underperformed the broader market this year. that's as many investors have stayed in the waiting room, queasy about the court's june decision. there are several possible outcomes, including the elimination of the controversial individual health insurance mandate. but some experts say striking down the law's medicare component would really hurt healthcare companies with large medicaid businesses.
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>> obviously, if the court were to overturn the law, especially throwing out the medicare expansion, there's a lot of lost revenue that they're planning for right now and making investment decisions accordingly. >> reporter: under the law, millions of uninsured americans will gain coverage, and the federal government will spend hundreds of billions of dollars over the next decade to help make that happen. so portfolio manager les funtleyder says money-wise there's a lot at stake for a lot of companies. >> if the law gets upheld, the knee-jerk reaction will probably be: good for hospitals, bad for managed care, probably the status quo for most of the other groups. >> reporter: but funtleyder also points out no matter what the court decides, the president's healthcare law has already started to transform the healthcare industry. as a result, he plans to seek out healthcare firms that adapt fastest to the changes. >> as investors we're looking for people who control costs and
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improve quality, and so companies like that will do better under any reform scenario. >> reporter: of course, it's also possible the supreme court kills the entire healthcare act. if that happens, healthcare stocks will enter a new period of uncertainty. that's as lawmakers would undoubtedly revisit healthcare reform. suzanne pratt, "nightly business report," new york. >> reporter: i'm darren gersh in washington. did congress go to far? that's the question before the supreme court as it prepares to hear historic arguments on the health care reform law. i'll have a preview tomorrow. >> susie: europe's debt crisis isn't over, and it could still spell trouble for the u.s. economy. that's what federal reserve chairman ben bernanke told lawmakers today. he says a weak european economy has already hurt u.s. exports to europe, one of the nation's biggest trading partners. bernanke also warned that u.s. money market funds are
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vulnerable to europe's financial troubles. those funds have 35% of their holdings in european investments. and the fed chairman didn't mince words about what's at stake. >> were the situation in europe to take a severe turn for the worse, the u.s. financial sector would likely have to contend not only with problems stemming from its direct european exposures, but also from an array of broader market movements, including declines in global equity prices, increased credit costs and reduced availability of funding. >> susie: meanwhile, another top fed official said today that the nation's largest banks are still a threat to the u.s. economic stability. the head of the dallas federal reserve bank, richard fisher, said in his annual letter that the largest banks are still too big to fail. he called for them to be broken up over time. his comments weighed on financial stocks, pushing the dow lower. the blue chip average fell 45 points; the nasdaq held on to positive territory, rising one point; and the s&p fell two. >> tom: homebuyers may have been shopping for homes last month,
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but fewer of them were buying. sales of previously owned homes slowed in february after posting an increase in january. the national association of realtors says existing home sales fell close to 1% to an annual rate of 4.5 million units. >> tom: looking at that trend, sales are up 9% from february of last year. and the number of homes for sale is also down significantly from a year ago. despite fewer homes, prices haven't moved much. the median price in february was $156,600, up just 0.3% from a year earlier. even with a mixed picture on home prices, real estate web site trulia.com finds for the great majority of the biggest cities in the u.s., buying is
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cheaper than renting. its survey shows owning a home is more affordable than renting in 98 of the 100 largest metropolitan areas. buyers have found bargains in areas where the housing bust hit the hardest, like florida and las vegas, but trulia's jed kolko says other markets also offer value. >> places like detroit, cleveland, atlanta and other places in the midwest and the south, places that weren't the hardest hit places when the bubble burst. those are places where housing tends to be affordable year in and year out. these are places where you see higher vacancy rates, more land to spare and slower economic growth over the long term. >> tom: the three cities where renting is still a better deal than buying: san francisco, honolulu and new york. >> susie: hewlett packard is at it again, another major restructuring. it said today it will combine its printing business into its personal computer group. both businesses have been struggling.
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its the latest move by the legendary technology giant to restore its dominance as an innovator. printers and p.c.s were once the stars of hewlett packard. they were popular with consumers and businesses big and small. they account for half of h.p.'s total sales, but they have been in decline and are a big problem for h.p. p.c. sales fell 15% in the first quarter of 2012, and revenue in the printer group was down 7%. and the competition is fierce. when it comes to personal computers, h.p. is up against dell, apple and lenovo. and in printing, there's xerox, lexmark and brother. tinkering with ways to jazz up the p.c. and printer businesses has been a ritual at h.p. former c.e.o. carly fiorina combined them in 2005. her successor, mark hurd, separated them. then leo apotheker proposed spinning them off. now meg whitman is combining them.
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it's whitman's first major move since she became c.e.o. six months ago. the strategy might work, but so far investors are not buying it. shares sold off today and are down almost 9% this year, making h.p. the biggest loser in the dow. joining us now to talk more about the outlook for hewlett packard: abhey lamba, senior technology analyst at mizuho securities.
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>> susie: we've been speaking >> if you look at the services, the organizations. we are seeing structures. tablets are taking more of our dollars, and more wallet share
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out of pcs. and it has been a service, and in printing there's headwinds. that's where hp needs to ramp business. there's a lot of business where hp needs to dom pete with the competition, and cloud computing and a lot of things are i.t. spending is flowing. >> susie: and some people are suggested that hp get into mobile computering. it doesn't really have anything in that area, but it needs to do so to be relevant. do you agree with that? >> yes, i think on the tablet side, we need to have a play over there. and the problem over there was it's really hard to compete against apple. so hp is going to jump on the windows 8 band wagon in terms of taglet. for smart phones, ime not sure if that's a wise area to enter.
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we want to be successful, and on the tablet side, they definitely need to have something. >> susie: what's your view on the stock? when you look at the chart, you see it's really down from where it was just 12 months ago. >> yeah. it has come down. but the problem is, we don't know what hps numbers are. meg inar a few months and how she plans to bring hp back on execution, and how she's going to improve execution and performance. so without having a longer term view ahead of us, we -- it's really hard to benchmark the company, and benchmark its performance. so we are staying on the sidelines, and we don't think -- a lot of innovations we've looked at. there's a growth engine. so a lot of these issues need to be resolved for us.
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>> susie: i have to jump in here. we've run out of time. very interesting analysis. thank you so much, and to be continued at another time. thanks a lot. and we've been speaking with abhey lamba, senior technology analyst at mizuho securities. >> tom: still ahead, goldman sachs says stocks are better than bonds. we'll see if our "street critique" guest agrees. hilary kramer joins us.
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>> susie: fresh off its recent initial public offering, the company behind "farmville" and "words with friends" wants to "draw something!" zynga is buying omgpop, maker of the overnight sensation "draw something." think "pictionary" played with friends on iphone and android handsets. the game debuted just six weeks ago, and it has already been downloaded 35 million times. now, while zynga won't say what it's paying, tech insiders put the price tag for omgpop at around $200 million. tom, the deal came late in the trading day and helped zynga shares close at their best level of the day, up 33 cents, or 2.5%, to $13.72. >> tom: susie, it went public in december at $10 a share. zynga shares have been on a tear, up 45% since the beginning of the year. let's take a look at tonight's "market focus."
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it was a day without clear direction for broad stocks, with the dow and the s&p 500 ending slightly lower for the second session in a row. the s&p continues marking time just below that post-recession high hit earlier this week. the index bounced around but in a very narrow range, ending with a small loss. the energy sector led the losers, falling 1%. financial stocks and utilities saw mild selling, illustrating the muted tone today. energy stocks were hurt by oil driller baker hughes warning its profit margin will fall as north american customers stop drilling for natural gas. shares got drilled, falling almost 6% on heavy volume. shares have been trending lower for at least a year as the drilling rig industry has been shifting away from natural gas due to historically low prices and looking for oil instead.
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that shift can raise costs, hurting profit margins. other large oil service stocks saw less selling. nabors fell 3%, schlumberger was down 2%, and halliburton fell less than 2%. analysts suggest the baker hughes challenges are its own and not industry-wide. the warning from the number three oilfield driller comes as energy prices continue climbing. crude oil settled up more than $1 per barrel, raising above $107 per barrel. the u.s. energy department said crude oil supplies fell in the past week while the market was expecting supplies to increase. also in energy, we learned after the closing bell, three giants are talking about teaming up to ship liquified natural gas from the u.s. to asia. according to the "financial times," exxon, b.p. and conoco are negotiating a $40 billion project focused on sending liquified natural gas from alaska to asia. other media reports indicate a multibillion-dollar international drug deal could be coming.
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generic drug maker watson pharmaceuticals reportedly is close to making a play for actavis out of switzerland. the price tag could be close to $6 billion, creating a global generic drug maker. shares of watson shot up on speculation of a deal, rallying almost 9% on very heavy volume. this is its highest price since january. after the close tonight, earnings from discover financial. they came in stronger than expected, beating estimates by 24 cents per share. customers using their discover cards more often helped improve its business, as did a growing number of student and personal loans. shares were down a fraction with the rest of the market today, and they fell another 2% after the earnings release-- perhaps some profit-taking after a 40% rally in the past year. another financial stock, insurance firm hartford, is bending to shareholder pressures to focus on its core property, casualty insurance operations. shares were up 1.5% on big volume.
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despite the weaker tone in the market the past couple of sessions, some drink stocks continue their rally. coca-cola is at its highest price of the year, up 0.75% today. starbucks continues hitting new highs. at its annual shareholder meeting today, the company announced it will expand into the energy drink business and add manufacturing jobs in the u.s. one of the new areas starbucks is competing is single-serve brewers, going up against green mountain roasters. that hurt green mountain stock earlier this month, but today shares jumped 10%. green mountain will carry starbucks coffee for its newest line of brewers. thanks to the booming business of ipads and smartphones, demand for wireless data has shot through the roof, and that has pinched wireless networks to squeeze more out of the airwaves they use. the federal communications
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commission proposed today more flexibility for airwaves used by satellite tv providers. it could lead to dish network launching its own wireless network. that possibility pushed dish shares up to a 52-week high. dish has spent $3 billion licensing airwaves, hoping to start up its own cellular business. and that's tonight's "market focus." >> tom: goldman sachs thinks stocks are the place to be for investors. in a global strategy report today, two of its portfolio strategists write: tonight's "street critique" guest is looking at dividend- paying stocks as bond rates rise.
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she's hilary kramer, author of "the little book of big profits from small stocks." >> tom: due agree with goldman's call. does it make sense to own dividend stocks with treasuries rising? >> it does, tom, but you don't want to own it is no growth stocks such as utilities. you want to own the stocks that can give you a dividend and continue to increase that dividend quarter over quarter. vu to be selective in terms of sectors. >> tom: looking for growth from the top line and dividends as well. >> lots of questions about previous picks of yours in the dividend space. including cell com israel. the share price has gotten crushed since you announced it back in july last year. >> the problem with cell com
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israel is the syrian unrest. it looked like egypt was behind us, and syria has been worse. vu a strong company with great market share, all the companies, even companies like teefva has been at depressed levels. >> do you own it? >> yes. >> and the great state of hawaii. what is your current think being sinclair broadcasting is what dave asks. sx*bgi, you mentioned it, and i has done nicely. sinclair has done l and anyone who bought this stock still have a 4% plus dividend yield. i do like sinclair, advertising revenues are coming back. and in general, tom, there's a sense the economy is healing and coming back, and so you're
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going to see companies across the board, where there's advertising, consumer spending, discretionary and luxury goods. those companys are going to improve in terms of the value, and you're going to see dividend yield rise. >> tom: and spaller cap. goi, a defense contractedor in july of 2010, share price cut in half. due own it? >> sure, and it's recovered incredibly since august september, 2011. it's coming back. it's so secret the company is for sale. >> tom: you've ridden is down, though. >> what about biosciences? it was pack in february you mentioned this. it has gone from two and a half to two. >> it's still a long company. this is about the pipeline. there will be many oncology conferences coming up.
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one in june, and the biotechs are one that you put away and hold. they should be only a shawl part of your portfolio. >> so you hold wmi. >> yes. sdpi. more questions coming up next. our guest is hilary kramer, authored of "the little book of big profits from small stocks". >> susie: the big board is well- known for the big, multinational companies listed here, but the new york stock exchange is launching a new program to support small businesses. today, it announced a partnership with accion, the largest microfinance lending network in the u.s. the collaboration is called "the n.y.s.e. big start-up," and its goal is to create jobs. the n.y.s.e. will contribute $1.5 million in seed money to fund the loans, and it is asking other firms to kick in additional money. however, n.y.s.e. c.e.o. duncan niederauer also wants big business to support the effort in other ways.
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>> someone might help with web site construction or logistics help or banking services or accounting or tax services. bring to the table what you can bring to the table, help that small company thrive. that's what big companies should be doing. every big company was a small company one day, right? >> susie: already, yelp and linked-in have signed on to participate, as well as microsoft, a nasdaq listed firm. >> tom: the tax man is waiting. federal taxes are due april 17, a couple of days later than usual. but that's less than a month away. all next week, kevin mccormally joins us with his best tax advice. he's editorial director of kiplinger's personal finance, and he's taking your tax questions online. just email taxtips@nbr.com. >> susie: here's what we're watching for tomorrow. volkswagon's breaking ground on a new plant in tennessee and we look at how that state's attracting jobs.
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we'll see if fedex's latest results are flying high as the shipping giant reports earnings. and teaching money mistakes-- it's tomorrow's "kids and cash." >> tom: and finally tonight, how about some mondelez international oreo's? that's the new name for kraft's global snacks business, which makes oreo cookies, cadbury chocolates and trident gum. and if you're scratching you're head, yes, it's a made-up word. two employees came up with it by combining "monde"-- latin for "world"-- with "delez," as in "delicious." kraft's marketing folks went with it, saying it evokes the idea of a "delicious world." when the spin-off is completed later this year, mondelez will trade under the ticker symbol m- d-l-z. that's "nightly business report" for wednesday, march 21. i'm tom hudson. good night, everyone. and goodnight to you, too, susie. >> susie: good night, tom. i'm susie gharib. good night, everyone. we hope to see all of you again tomorrow night.
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